Key Initiatives

We continue to evolve and advance our management systems in a manner that aligns with Hess’ portfolio and organizational structure. As part of this process, in 2018 we reorganized into teams of functional leaders (e.g., EHS, Wells, Human Resources, and Supply Chain) which will help us continue to improve oversight and assurance across the company and provide expertise in key functional areas within each asset. Each leader is responsible for overseeing activities in their functional area across the company, verifying that relevant standards are applied as appropriate and working with each asset to optimize safety, quality, delivery and cost. Leaders are supported by technical authorities (TAs) – many of whom are embedded directly into our assets. Functional leaders and additional TAs as needed meet monthly to support enterprisewide initiatives, promote transparency of activities and optimize synergies across our functions and assets.

These functional leaders will replace the prior Operational Excellence Network in providing cross-functional, companywide guidance on the development of high-value enterprise initiatives. It is anticipated they will continue to help us design and implement key enterprise initiatives by fostering collaboration across Hess’ global resources and creating standardized methodologies supported by tools and processes.

Over the past several years, we have been working on a number of initiatives to enhance our operational effectiveness and EHS performance, including development and implementation of the Hess Operational Management System (discussed in our 2018 Sustainability Report) and the two additional examples provided below.

EHS Global Standards

Our environment, health, safety and social responsibility (EHS & SR) management system provides an important framework for continuous improvement in enhancing operational excellence, tracking key performance metrics, managing risk and maintaining regulatory compliance. As part of our effort to improve our operational effectiveness and EHS performance, we have been working to develop and implement an enhanced set of EHS standards across the company. The goals of this project are to formalize enterprisewide expectations and accountabilities and support a globally consistent approach to operational excellence. By documenting our expectations in the form of standards, we aim to strengthen assurance across the enterprise.

Following a risk-based approach and our Documents Standard, we prioritized the order of development and implementation of enterprisewide standards into three phases, as shown in the graphic below.

As part of implementation, we require our assets to complete desktop gap assessments in which they compare their current documented practices with the expectations of the enhanced standards and develop actions to close any gaps identified.

In 2018 we continued development and approval of the Phase II and III standards through cross-asset and cross-functional teams, including finalizing and approving the Excavation and Trenching Standard. We also added a standard on food safety to Phase III. All assets included within the scope of the project completed gap assessments for the newly approved standard and created implementation plans to align with the project timeline. We completed implementation of Phase II standards by the end of 2018, with the exception of those assets that received approval for dispensations. We plan to implement all Phase III standards by the end of 2020. Additionally, in 2019 we plan to reassess all Phase I standards as part of our document review process.

An important aspect of the standards development process has been the incorporation of Lean principles. For example, we developed a standardized work process to gain efficiency, incorporate lessons learned and track our progress from the start of development through the implementation of a standard. To add clarity for all those involved and to mitigate inefficiencies, we created support tools and guidance documents and made them easily accessible through our company intranet. To bring accountability, we established metrics and charts to track the completion of gap assessments and discussed progress as part of our routine operating rhythm.

Reliability Operations

In 2018 we continued to improve equipment reliability through a focused cultural shift that promotes greater ownership and proactive maintenance of equipment to avoid issues before they happen, rather than responding after a problem occurs. To support this, we have merged our conventional maintenance and production operations’ groups to form a new more aligned structure, in which everyone from the front-line workers to senior management plays a role in maintaining and improving how we operate and helping to ensure conformance to expectations and enterprisewide standards. Through this effort, which we call Reliability Operations, we aim to maximize efficiency, reliability, integrity and surveillance; optimize production and costs; and drive continuous improvement, including improvement to EHS performance.

Reliability Operations is the culmination of various improvement initiatives and approaches we have undertaken, including Operations of the Future, through which we reorganized management structures and processes to better focus the production organization on working in service of our colleagues in the field. It also integrates Lean principles, such as maximizing flows of information and work across functions and teams. Through these efforts, we have observed that more information is being shared cross-functionally as part of the regular operating rhythm to keep our operations running reliably and safely.

We have also seen in some key areas improved efficiency and performance trends, including reduced unplanned work and deferrals, fewer unexpected equipment failures, reduced EHS incidents and lower production costs, all while maximizing production. Certain of our midstream facilities have halved the time it takes to perform routine compressor overhauls, better coordinated cross-functional teams to provide “just-in-time” parts (an inventory strategy in which materials are ordered and received on an as-needed basis), and improved predictive monitoring to reduce downtime associated with planned machine overhauls. We are also continuing to integrate contractors in day-to-day operations to support these operational improvements.